Book Association Challenges Retailers’ Price Plan

What do Amazon and Wal-Mart do to win control of the market for hardcover bestsellers...

By MOTOKO RICH
Published: October 22, 2009

The American Booksellers Association, which represents independently owned bookstores, has sent a letter to the Justice Department asking it to investigate what it describes as “predatory pricing” by Amazon, Wal-Mart and Target.

In the letter dated Thursday, the association argues that steep discounting on 10 hardcover titles by authors including John Grisham, Stephen King and Barbara Kingsolver “is damaging to the book industry and harmful to consumers.”

The price war began last week when Wal-Mart announced that it would offer Walmart.com customers who preordered any of 10 of the coming holiday season’s biggest potential best sellers the chance to buy the books in hardcover editions for just $10. Typically new hardcovers sell for $25 to $35, although some discounting is common.

Amazon.com quickly matched Wal-Mart’s preorder price on the same books, which include “Ford County” by Mr. Grisham, “Under the Dome” by Mr. King and “Going Rogue,” Sarah Palin’s memoir. Wal-Mart then lowered the price to $9, and Amazon followed suit. By late Friday afternoon Wal-Mart had cut another penny off the price.

On Monday, Target entered the fray by offering six of the preorder titles on Target.com for $8.99. By Tuesday Wal-Mart had lowered the price on those titles to $8.98.

The association’s letter, which is signed by the group’s nine board members, accused the retailers of “devaluing the very concept of the book” and effectively selling the books at a loss in an “attempt to win control of the market for hardcover best sellers.” Retailers typically pay publishers a wholesale price of half the list price of a hardcover book — so on a $35 hardcover, the retailer pays $17.50, meaning that it loses money on a $9 consumer price.

Most publishers whose titles were affected did not respond to requests for comment by deadline. But David Young, chief executive of Hachette Book Group — publisher of James Patterson, whose “I, Alex Cross” is included in the discounted promotions — said he wished that the United States would emulate France’s prohibition against booksellers’ pricing books below cost. “I do think this massive devaluation of the industry’s crown jewels could very quickly be extremely harmful,” Mr. Young said. “And I would not be alone in thinking that.”